Alabama residential home sales improve by 3.3% in January

View full sizeAlabama home sales in January 2014 improved 3.3% from prior year. Infograph courtesy of ACRE. All rights reserved.

Alabama residential sales totaled 2,610 units in January, an improvement in sales growth of 3.3 percent from last January and 96 units below our monthly forecast. The winter storm hit several parts of Alabama on January 28th and essentially brought economic life including the housing market to a virtual standstill through the end of that week. This was the last week of the month and a period that usually experiences a flurry of home closings as month-end is considered a convenient time for both buyer and seller. Many of the scheduled closings were postponed until early February and thus not part of the January statistical count.

Supply: The statewide housing inventory in January was 30,536 units, a decrease of 1.1 percent from January 2013 and 18.5 percent below the month of January peak in 2008 (37,470 units). There was 11.7 months of housing supply (8.5 months considered equilibrium during month of January) in January 2013 versus 12.2 months of supply in January 2013, a decline of 4.2 percent. January inventory decreased by 2.9 percent from the prior month. This is consistent with historical data that indicates January inventory on average (09-13) traditionally decreases from the month of December by .9 percent. In contrast to reports of lack of inventory at the national level, Alabama still has a plentiful supply in most local markets. Only 3 of 25 or 12 percent of local markets have single-digit months of housing supply so this is an area where more reduction would be welcome news. With that said, metro markets representing 70 percent of statewide transactions, are edging closer to equilibrium with 10.8 months of supply.

Demand: January statewide residential sales declined 19.3 percent from the prior month. This movement is consistent with seasonal trends & recent historical data that indicates January sales, on average (09-13), decrease from the month of December by 20.3 percent.

Pricing: As can be expected when taking into account our overall level of supply (see above), pricing represents the primary indicator that still has the greatest upside in the future. The median sales price did improve 1.9 percent across Alabama in 2013 in the aggregate but remains below the nation's pace of appreciation. ACRE prefers gradual increases in pricing over spikes seen in many parts of the country, typically in markets hardest hit by the recession. Pricing can fluctuate from month-to-month due to sampling size of data. The statewide median selling price for the month of January was $122,885, a decrease of 4.9 percent from the prior month. This movement contrast with historical data (09-13) that reflects that the January median selling price traditionally increase from the month of December by 5.2 percent. 17 of 25 or 68 percent of local markets experienced positive movement in median sales price growth from January 2013.

Lawrence Yun, chief economist of the National Association of Realtors®, who recently presented at ACREcon said "Direction wise I see the economy is expanding. I expect 2.5% GDP growth this year. In the 4th quarter growth was solid but that was one quarter. We need that rate to be consistent for four quarters." Assuming that growth and concurrent job creation, Yun still sees challenges for housing sales going forward. “Housing affordability is coming down. You have mortgage rates and prices rising in 2014 but it will take growth and job creation on the other side,” he said. “For the year as a whole I think it will be neutral on US housing prices.” Yun said "He is already seeing softness in housing readings for the first quarter, and hopes the remainder of the year will be strong enough to balance it out."

More industry perspective: “January 2014 sales of new and existing homes reflected the decline in the affordability rate in most regions, the widespread inclement weather and the rise in interest rates. The slowdown in year over year unit sales also reflects the absence of real growth in employment and household incomes,” said Steve Murray, editor of the REAL Trends Housing Market Report. “As we stated last month we believe that unit sales are nearing a normal level given employment, the number of households, mortgage rates and household income. We expect that year over year increases will continue to be only slightly improved on a year over year basis in the months ahead.”

The Alabama Association of REALTORS serves as the voice of the real estate industry in Alabama. AAR is the largest statewide organization of real estate professionals who sale, lease, appraise, and develop residential, commercial, rural and resort properties.

The Alabama Center for Real Estate's core purpose is to advance the real estate industry in Alabama by providing relevant resources in the areas of research, education and outreach.